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Nov. 16 (NBD) -- Renhe Pharmacy Co.,Ltd announced Wednesday that it will invest 500 million yuan (75.4 million U.S. dollars) to set up a online small loan company. 

Renhe Pharmacy mainly engages in medical manufacturing, as well as the wholesaling and retailing of healthcare products. The company said that marching into financial sector will improve their competiveness by expanding new businesses. In addition, the small loan company is expected to deliver stable incomes, which will diversify the source of income of Renhe Pharmacy as a whole.

NBD noticed that besides Renhe Pharmacy, a flock of other listed companies are also planning to expand their footprints to online lending. For example, ST&SAT, a Foshan-based shoe company, announced last month its plan to invest 153 million yuan (23.1 million U.S. dollars) to set up a joint venture company of small loan. Besides, Zhejiang Sunriver Culture Co., Ltd, engaging in animation and adverting, was also reported to hold 65 percent shares of a microloan company last month.

According to WDZJ.com, a platform providing information on online lending, as of the end of March 27 this year, there were 82 microloan lenders in China, among which 51 were backed by listed companies.

Xue Hongyan, director of the Suning Financial Research Institute, said that most of the listed companies are money-driven because an online lending platform will be an admission ticket to the high-yield cash credit business. Besides, an online lending platform is both allowed for personal loans and company loans. Therefore, it is a good chance for those enterprises which want to transform to supply chain finance service. Furthermore, it is better to get the permission from regulators first before the application standard is raised.

According to the reports of 2345.com, the Shanghai-based internet company reaped 1.965 billion yuan (296.4 million U.S. dollars) in revenue in the first 3 quarters of this year, a year-on-year increase of 57.02 percent. Moreover, the gross profit ratio of the first half of this year stood at 97.12 percent.

Microloan lending is a niche sector and many listed companies are attracted by its high profitability, said Fang Song, president of Guangzhou Internet Finance Association. However, the hardest part for cross-sector players is to find borrowers. If they cannot get borrowers or the costs are too high, it would be hard to make profits.

For listed companies, they have to take advantage of their customers. Some listed companies have large corporate partners both in the upstream and downstream. However, they don't have individual customers. That's why some companies postpone operating even if they have already received permissions from regulators, explained Fang.

Email: tanyuhan@nbd.com.cn